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Month: September 2016

Many people may be surprised to learn that unauthorized immigration benefits the US economy. In fact, Economist Gordon H. Hanson, has explained that stopping unauthorized immigration may cause a net drain on the US economy. Unauthorized immigration benefits the US economy by providing employers with low wage labor. Low wage labor keeps the costs of producing goods down which leads to lower costs for the consumer. This means that not only are Americans able to purchase goods for lower costs, but so are foreigners. As a result, US exports are higher due to more globally competitive prices. However, if employers didn’t hire unauthorized immigrants, then the cost of production would rise, prices would increase, and exports would decline.

An example of the problems that can arise when rates of unauthorized immigration decrease can be found in the state of Arizona. Many economists agree that Arizona’s economy took a hit after the state cracked down on unauthorized immigration. However, some argue that the benefits that come with reducing unauthorized immigration, such as lower government spending on health care and education for unauthorized immigrants and the employment of more US born labor, outweighs the economic costs that accrue from cracking down on unauthorized immigration. Contrary to popular belief, research shows that this is not true.

The US Department of Agriculture (USDA) conducted a study where researchers performed simulation analysis to determine what the effects would be on the economy if the unauthorized immigrant population decreased or if the unauthorized immigrant population increased. Results showed that an increase in the unauthorized immigrant population would lead to the increased employment of unauthorized immigrants at lower wages which would lead to increases in agricultural outputs and exports. However, a decrease in the immigrant population would lead to several problems in the US economy.

USDA research results show that along with a decrease in unauthorized immigrant labor there would be a labor shortage of farmworkers by 3.4 to 5.5 percent. Long run effects of decreased immigrant labor include an increase in wages for low paying positions and a decline in aggregate income. The reasons for a decrease in aggregate income include a relative decrease in production in the long run and the redistribution of employment from higher income positions to lower income positions. The long run relative decrease in production means that production would not only decrease in the agricultural industry, it would decrease throughout the entire US economy. This would result in the reduction of incomes for higher wage positions.

Overall, the USDA found that decreasing unauthorized immigration by a significant amount would badly affect the US economy. In fact, the benefits that come from decreasing unauthorized immigration would not outweigh the negative effects that decreasing unauthorized immigration would have on the US economy. So if lawmakers want to decrease unauthorized immigration, then they must first come up with a well thought out plan on how to handle the detriments associated with decreased levels unauthorized immigration.

The US and many European countries have placed sanctions on Russia in response to Russia’s aggression in Ukraine. However, the current sanctions on Russia may actually be increasing group solidarity, the cohesiveness of the Russian population. By increasing group solidarity, sanctions on Russia are actually having unintended consequences.

According to the Pew Research Center, Russians have record high confidence in President Putin’s ability to handle international affairs, while the Russian population’s view of foreign world leaders has plummeted. There are several possible reasons for this. One possible reason is that the state-run news media in Russia may broadcast international events in a way that favors Putin and the Russian government. Another possible reason is that the Russian government has been promoting a narrative that says that the west is trying to hurt Russia.

In light of the Russian government’s narrative, sanctions may be perceived simply as a way to hurt Russia and not as a way to force Russia to move troops out of Ukraine. When the narratives of the state-run news media and Russian sanctions are combined, this results in the Russian population displaying more support for their leaders and less support for foreign world leaders. Therein solidarity is displayed. Why would I support someone that wants to harm my country? This is the question members of the Russian population are forced to ask when they are convinced by the Russian government’s narrative and see that European countries and the US placed sanctions on Russia which in turn hurt the Russian economy.

Due to the group solidarity created by sanctions and the Kremlin’s narrative, Putin may not succumb to the pressures of sanctions. This is what we have seen thus far. So far the sanctions have increased political support for Putin. Sure 73% of Russians say the economy is in poor shape, but Putin’s approval rating is 82%. His approval rating even increased during the Ukraine crisis and sanctions have failed to bring his approval rating below 80%. So sanctions are not really placing pressure on Putin. In fact, withdrawing troops from Ukraine may hurt his approval rating since it could be seen as succumbing to the wills of the nations that are trying to hurt Russia. If Putin wants to be elected, and what politician doesn’t want to be elected, then he doesn’t need to change anything he’s doing. This is true as long as solidarity in Russia is high.

As long as solidarity in Russia increases, the use of sanctions on Russia will be largely ineffective. The only way for sanctions to become effective would be for the Russian population to understand or believe that the Russian government is lying about the motives and actions of the US and other nations. This would lead to the Russian population no longer supporting President Putin.